529 Plan and Student Loans

annoyingdad
Thu, 08 Aug 2013 20:55:33 +0000

The qualified college expenses need to be incurred in the same tax year as the 529 distribution. I would think you could pay qualified expenses with a loan and then pay off the loan principle but not the interest later in the same year with 529 funds. It would be the same as paying out of pocket and then reimbursing yourself from the 529 in the same year. But that’s not what you are proposing. You can change the beneficiary of 529 plans from one child to another but you need to go through the financial institution to do so before using the funds for the 2nd child’s qualified expenses.